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Fort Worth-based RadioShack Corp. is preparing to shut down the almost-century-old electronics chain in a bankruptcy deal that would sell about half its stores to Sprint Corp. and close the rest. (Rose Baca/The Dallas Morning News)

RadioShack Corp. filed for bankruptcy Thursday after attempts to reorganize its business over the last two years failed.

RadioShack said it’s reached an agreement with its largest shareholder, hedge fund Standard General, to acquire 1,500 to 2,400 RadioShack stores.

Standard General has an agreement with Sprint to create a new “store within a store” retail presence inside up to 1,750 of the RadioShack stores.

RadioShack also plans to ask the court to allow it to close its remaining 2,000 stores. RadioShack said discussions are underway to sell its remaining assets. A store closing list isn’t available yet.

RadioShack filed in Delaware U.S. Bankruptcy court. It listed assets of $1.2 billion and debts of $1.39 billion. The retailer also filed warn notices with the Texas Workforce Commission saying that a shutdown of the company means more than 1,000 job losses at headquarters and distribution facilities in Fort Worth.

The Fort Worth-based company outlasted dozens of other electronics chains that have liquidated in recent years, such as Circuit City, Tweeter and Ultimate Electronics. But in the end, it ran out of time to fix its problems.

RadioShack, which was founded in 1921, changed its name from Tandy Corp. in 2000. The company struggled in recent years as the wireless business became more competitive and items like batteries and accessories became easier to buy online and in big-box stores. It also suffered a decade of missteps from a revolving door in the C-suite.

RadioShack posted losses that totaled $1 billion over the last three years and double-digit sales declines. The mobile phone and wireless contract business represented half of the company’s sales in recent years, but that side of the store has continued to burn cash.

Well, they HAD it all.

Competition has accelerated not just from the wireless carriers AT&T and Verizon, but also from Wal-Mart, Costco and Best Buy.

In the past couple of weeks, clearance sales started popping up as RadioShack tried to shore up its dwindling cash position. Some stores have already closed.

CEO Joe Magnacca was hired in February 2013 to turn around the company.

In December, he announced a plan to cut annual costs by $400 million, partly by closing more than 1,000 stores. But lenders, led by Salus Capital Partners, balked at the plan, which Magnacca said was necessary to reorganize the business.

Analysts gave him credit for having good ideas but said his strategy was one that the board should have put in place years ago.

RadioShack ended the third quarter on Nov. 1 with total liquidity of $62.6 million – $43.3 million in cash and $19.3 million available to borrow from its bank loan. Total debt was $841.5 million.

One of RadioShack's new concept store in Manhattan. (Photo courtesy of RadioShack Corp.)

Salus Capital Partners is throwing more money at RadioShack, according to a report in the Wall Street Journal.

That may mean the hedge fund believes the consumer electronics retailer has a future or Salus has figured out how to make money backing RadioShack no matter what happens to it.

The Wall Street Journal reported Monday that Salus will provide a $500 million debtor-in-possession loan that RadioShack would use to fund operations in bankruptcy. RadioShack stock is trading up about 18 percent.

The offer expires on Thursday, according to the Wall Street Journal. So maybe Salus is pushing the issue. RadioShack first warned of a possible bankruptcy filing back in September.

Salus Capital’s co-founder and CEO Andy Moser has a particular interest in ailing retail companies. Moser has worked for several banks and was co-founder of the asset-lending division of Gordon Brothers, a firm that specializes in liquidating retail chains.

Last month, Salus Capital provided a $20 million debtor-in-possession loan to teen apparel retailer Delia’s, which is going out of business. Other retail companies that have received loans from Salus include woman’s apparel retailer Cache Inc. which is exploring strategic alternatives, and Kid Brands which filed for bankruptcy protection last summer.

The possible loan offer to RadioShack would replace a $585 million financing package RadioShack obtained in December 2013, according to the newspaper.

RadioShack ended the third quarter on Nov. 1 with total liquidity of $62.6 million — $43.3 million in cash and $19.3 million available to borrow from its bank loan. Total debt was $841.5 million.

The retailer’s sales have been declining since 2010, but CEO Joe Magnacca believes the chain needs to shed its unproductive stores in order to complete a turnaround. Magnacca’s plan is to close 1,100 stores. He made a dent last year by closing 175 stores.

Salus won’t let him close more than 200 stores a year.

RadioShack’s woes come as analysts are raising outlooks for Apple and Best Buy as new consumer electronics products fill their shelves and Best Buy has learned how to better compete with Amazon.

RadioShack chief marketing officer Jennifer Warren is the latest top executive to leave the troubled consumer electronics chain. She was behind the Fort Worth-based retailer’s TV ads becoming more edgy with a music video from Robin Thicke’s single “Blurred Lines” and a host of pop culture characters from the 1980s.

RadioShack declined to comment on her departure, but word is that Warren is leaving for another job. Her new employer hasn’t announced her hiring yet.

Warren joined RadioShack in April 2013 and was one of CEO Joe Magnacca’s first hires when he was putting together his turnaround team. The ad that featured classic characters from 35 years ago, including Mary Lou Retton, Hulk Hogan and Twisted Sister among others, had the great tag line: “The 80s called. They want their store back.”

It received strong reviews for being funny and sending the message that RadioShack needed to change. But it failed to perform from the standpoint of bringing in more customers and sales.

Warren held management roles at national advertising agencies including Razorfish, Austin-based GSD&M and T-3 before going to RadioShack. Her experience includes working on campaigns for Samsung, Wal-Mart, Sam’s Club, Marshalls, T.J. Maxx, Zale Corp., Cost Plus World Market, Land Rover, Charles Schwab, Kinko’s, Dell, Chili’s and Hallmark.

RadioShack reported a wider third-quarter loss on Thursday and said it will slash costs by $400 million. Included are store closings and staff cuts that reduce personnel costs by more than 30 percent.

So far this year, RadioShack said it has closed 175 stores. The Fort Worth-based consumer electronics chain wants to close a total of 1,100 of its 4,200 stores, but its lender has vetoed that idea.

For RadioShack to succeed, CEO Joe Magnacca said, the company needs to reduce its cost structure. The Fort Worth-based consumer electronics chain didn’t provide the number of staff cuts, but said the lost jobs will come from headquarters, field, store and store support centers.

But analysts worried that the some cuts in store staffing and overtime will be an untimely hit to morale.

RadioShack’s wireless business, which has been weak for years, pulled down results again in the third quarter. The company has had ongoing negotiations with major carriers AT&T and Verizon for sometime and Magnacca said the lack of Apple iPhone 6 inventory hurt its third quarter results.

Magnacca pulled out sales performance of RadioShack’s remodeled stores, mobile business and its other merchandise to show that there are parts of the store performing. Over the long Thanksgiving weekend, store sales declined only 1 percent, he said. The look of Radioshack.com was recently updated. The company has the ability to make quicker price adjustments and have real time pricing match its stores. It’s also matching competitors’ prices and added the ability to ship from stores. That speeds up deliveries, Magnacca said. Online sales were up 20 percent over the Thanksgiving-Black Friday weekend, he said. “The upside potential there is enormous.”

Cuts outlined on Thursday include $100 million from fewer jobs in store and regional management, $21 million from headquarters job cuts. Marketing spending is being cut by $105 million. Savings on professional fees are $41 million.

General expenses such as travel, recruiting and credit card fees will be reduced by $28 million. Another $90 million in savings would be from store closings and asset sales. The last chunk is a big if, without lender approval.

Some of the job cuts are through attrition and many have already happened including a 50 percent reduction in the number of regional store managers as districts were consolidated.

That move alone, Magnacca said, saved $17 million. By reconfiguring store hours the company expects to save $36 million a year. Beginning next week, changes in store staffing and overtime will result in annual savings of $47 million.

There will be additional staff cuts in January that will represent $18 million in savings.

In the third quarter, the company posted its 11th consecutive quarterly decline in sales. Total sales declined 16.1 percent to $650.2 million from $775.4 million in the same period last year. Same-store sales declined 13.4 percent.

RadioShack reported a loss of $161.1 million, or $1.58 a share, in the period ended Nov. 1, compared with a loss of $135.9 million, or $1.35 a share, a year ago.

Sales of mobile phones, related merchandise and two-year contracts declined 24.7 percent to $280.6 million from $372.5 million a year ago. In recent years, AT&T, Verizon and T-Mobile have all opened their own stores. Best Buy and Wal-Mart have beefed up their wireless offerings. Magnacca said he believes there’s a smaller, but profitble mobile business for RadioShack.

The other half of the store posted a smaller 3.1 percent decrease in third-quarter sales to $298.5 million, from $308 million a year ago. Many basics like batteries, phone car chargers and audio and video cables posted declines. That was offset by higher sales in headphones and music accessories and RadioShack’s “Fix It Here” smartphone repair service launched earlier this year.

RadioShack ended the quarter with total liquidity of $62.6 million that included $43.3 million in cash and $19.3 million available to borrow under its credit agreement. Total debt was $841.5 million.

RadioShack again mentioned the possibility of a bankruptcy court filing in its future. This month, RadioShack received a notice from its lender Salus Capital Partners saying it’s in default, but the company is disputing that claim.

“RadioShack is late to the party in focusing on reducing costs,” said Wedbush analyst Michael Pachter. He likened it to a tree falling in the forest.

The company’s cost cutting isn’t enough to avoid a debt restructuring early next year, said Fitch Ratings analyst Philip Zahn said RadioShack doesn’t have enough liquidity beyond its revolver and virtually all of its assts have been pledged to its debt.

“As a result, there continues to be a high likelihood of a bankruptcy filing or other outcome that is detrimental to bondholders,” Zahn said.

RadioShack Corp. said Tuesday it has received a notice from its lender saying the retailer has failed to meet required covenants under its $250 million term loan.

RadioShack said it believes the claims are “wrong and self-serving.” Salus Capital Partners and Cerberus Business Finance entered into a new agreement with RadioShack on Oct. 3.

“We intend to do everything in our power to prevent them from using what we see as unfounded technical arguments to benefit unjustly at the expense of other creditors, the hundreds of communities we serve, the many other businesses we support and the jobs of more than 25,000 hard-working people,” said RadioShack CEO Joe Magnacca in a prepared statement.

The claims relate to the recapitalization and investment agreement and amendment to the term loan.

The Fort Worth consumer electronics chains said it intends to “vigorously contest the claims.”

“We will do everything we can to assure that these claims do not distract us from our ongoing efforts to rationalize our capital structure and transform our business,” Magnacca said. “We will maintain our focus on operating our business as we move forward.”

Lenders holding a majority of the loans under the credit facility have told the company that they intend to continue to extend it credit under the terms of the loan, RadioShack said.

“This is particularly disturbing in light of meaningful steps we have taken in our turnaround plan, as well as the recapitalization steps announced in October,” Magnacca said. If RadioShack meets certain performance measures, the lenders would be able to convert at least $120 million of debt into equity.

Earlier this year, the company’s lenders stopped RadioShack from closing 1,100 unprofitable stores. RadioShack said by doing so it can focus on its profitable stores. It estimated that earnings before taxes and other expenses would increase $83 million with the closures and another $87 million would come from inventory.

RadioShack asked its lenders to allow it to close stores again in late October and was rejected.

RadioShack is expected to post its third consecutive annual loss. The company opened at 8 a.m. on Thanksgiving Day to try to get a jump on holiday spending.

RadioShack said Wednesday it has hired a former U.S. Treasury senior adviser to help it fix its business.

The Maeva Group will provide advisory services to RadioShack’s board of Directors and management as the retailer tries to turnaround its operations and finances.

Harry J. Wilson, founder and CEO of the Maeva Group, was named chief revitalization officer of RadioShack, reporting to RadioShack CEO Joe Magnacca and the RadioShack Board.

Wilson was a senior advisor in the U.S, Department of the Treasury and was a senior member of the Auto Task Force, which was responsible for the Treasury’s role in the restructuring of General Motors and Chrysler.

Wilson led a team responsible for the business and financial work of the task force and also led the team that completed the General Motors bailout.

“Harry Wilson’s experience in guiding companies through successful turnarounds speaks for itself and will be extremely valuable as we continue our efforts to revitalize the company. We welcome his insight and involvement,” Magnacca said in a statement.

Wilson said he believes RadioShack is worth saving.

“RadioShack remains an important retailer serving many key markets. While challenging secular trends have undermined its performance in recent years, we believe that there is a great deal of opportunity ahead of it.

“We look forward to working with the management team, the board, customers and vendors to help address these issues as quickly as possible and to revitalize the company,” Wilson said in a press release this morning.

RadioShack said earlier this year that it may have to restructuring in bankruptcy.

One of RadioShack's new concept store in Manhattan. (Photo courtesy of RadioShack Corp.)

RadioShack said Thursday that it may have to file bankruptcy to reorganize its business.

The company’s earnings report showed sales dropping 20 percent and its loss doubling year-over-year in the second quarter.

CEO Joe Magnacca said this morning in a press release that the company is looking for more capital needed for turnaround efforts he started 18 months ago.

“We are actively exploring options for overhauling our balance sheet and are in advanced discussions with a number of parties,” he said.

RadioShack is in talks with its existing lenders, bond holders, shareholders and landlords, he said. Solutions may include a debt restructuring and store closings and other actions that will significantly reduce the company’s costs, he said.

“Details of a recapitalization haven’t been finalized. As a result, we may be required to seek to implement an in-court proceeding under Chapter 11 of the United States Bankruptcy Code,” the filing said.

So far this year, RadioShack has closed 47 stores by not renewing leases. Magnacca wanted to close more than 1,000 of the chains 4,200 U.S. stores, but its lenders nixed that idea. Under its current credit agreement it can close only 200 stores a year.

The Fort Worth-based consumer electronics chain reported a net loss of $137.4 million, or $1.35 a share in the period ended Aug. 2, compared with a loss of $52.2 million, or 51 cents a share, a year ago.

RadioShack said a weakness in consumer electronics, shoppers waiting for new smartphones out this fall and aggressive price competition in the mobile space hurt its second quarter results.

Intense promotions from wireless carriers such as AT&T, Verizon, Sprint and T-Mobile, motivating customers to switch networks and offers for new phone financing left it out of the loop. Those programs initially were only offered by the carriers. This month, RadioShack began offering the carrier financing programs too.

RadioShack ended the quarter with $30.5 million in cash and $152 million available to it on its credit agreement. The company’s total debt was $658 million and doesn’t come due until 2018 and 2019.

Second quarter sales fell 22.percent to $673.8 million versus $861.4 million last year. Same-store sales fell 20 percent both from a decline in traffic and a 30.4 percent decline in its mobile business.

Wednesday, Wedbush Securities analyst Michael Pachter said in a report where he lowered his price target for the stock to $0, that a bankruptcy filing was imminent.

“RadioShack’s operational decisions are now being vetted by creditors and equity investors are no longer relevant to management decisions the creditors clearly are in control of the ship and, in our view, the ship is sinking,” Pachter said.

Magnacca didn’t take questions form analysts during the call this morning. He emphasized that no decision has been made yet about how the company would recapitalize.

“It’s clear the pace of our turnaround simply isn’t not fast enough” and so the company needs more cash to see plans through, he said.

This holiday season, the company plans to be more aggressive both with assortments and pricing, Magnacca said.

RadioShack CEO Joe Magnacca has joined the board of American Apparel, a chain that’s garnered attention for everything but its apparel in recent months.

Founder Dov Charney was removed from his posts as chairman, CEO and president on June 18 after allegations of sexual harassment and misappropriations of corporate funds.

This won’t be a cushy directorship for Magnacca, who is trying to turn around the Fort Worth-based electronics chain. Magnacca joined RadioShack in February 2013. Shares have been trading below $1 in recent weeks.

Charney owns 43 percent of American Apparel and the new board has to figure out whether he’ll be back in some fashion.

New American Apparel directors include the board’s first woman, former Fisher Communications Inc CEO Colleen Brown.

Other new members include David Glazek, from Standard General, a hedge fund that owns of American Apparel stock and Media General director Thomas J. Sullivan. They join co-chairmen David Danziger and Allan Mayer.

American Apparel designs and makes clothing for women, men and children. It sells both wholesale to other retailers and from 246 stores in 20 countries. It has seven stores in Texas including two in Dallas at Mockingbird Station and NorthPark Center.

FORT WORTH — RadioShack Corp. CEO Joe Magnacca told shareholders Tuesday that the company is aggressively negotiating with landlords to reduce rents and plans to close 200 stores year in each of the next three years.

A total of 600 stores through 2016 won’t violate covenants with its bankers, who earlier shot down a plan disclosed in March to close 1,100 of its 4,300 company-owned stores this year.

The dispute has slowed down the Fort Worth-based retailer’s turnaround efforts, Magnacca said. “We realize we have different lenders with different needs. We’ll have to live with closing up to 600 stores.”

“We’re having daily dialogue with our lenders,” he said speaking to reporters before the meeting.

So far, RadioShack has closed 20 stores this year. The remaining 180 stores haven’t yet been identified because they hinge on lease negotiations and each store’s business.

“We’ll avoid closing during the holiday season where it makes sense,” he said.

The electronics chain that uses lower case letters in its brand name operates 228 stores in the Midwest and Southeast.

In recent years, hhgregg has popped up on lists of potential new retailers entering this market, but so far has stayed away.

It’s been tough sledding for electronics chains who came here to grow. The market has had its share of empty boxes from Circuit City and CompUSA to Ultimate Electronics and Tweeter.

ORIGINAL POST on April 22:
RadioShack Corp. said Tuesday that Troy Risch, executive vice president over store operations, has “resigned to pursue other interests.”

The company’s filing said that Risch’s duties will be temporarily assumed by other members of management effectively immediately. He resigned on April 18.

The departure comes as Fort Worth-based RadioShack is trying to close 1,000 stores. It’s negotiating that move with its lenders.

Risch was hired in December 2012 before CEO Joe Magnacca joined the company in February 2013.

He was one of five top executives who were promised retention bonuses under a new agreement with the board in March. To receive the bonus, $275,000 in Risch’s case, the executive had to stay with the troubled company through March 1, 2015.

Risch worked at Target Corp. for 19 years before joining RadioShack where he was in charge of store operations and real estate. At Target, he started out as a store manager and moved up to executive vice president of stores from 2006-2011.